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December 30, 2018

Mini-budget to press compliant taxpayers

December 30, 2018

KARACHI: New year is likely to press compliant taxpayers with new taxes in the second mini-budget as the cash-strapped government is struggling to increase revenue collection to slash budget deficit and create room for development expenditures.

The government is set to announce second supplementary budget within less than five months after presenting its first supplementary budget in September.

The government planned to introduce a mini-budget in the next couple of weeks, realising serious challenges to the economy. Government is estimating an additional revenue generation to the tune of Rs150 to 160 billion.

The Federal Board of Revenue (FBR) has been assigned a revenue collection target of Rs4.435 trillion for the current fiscal year of 2018/19, 15.4 percent higher than the collection of Rs3.842 trillion in the preceding fiscal year.

The FBR missed the revenue collection target last fiscal year, although the growth was 14.1 percent.

The revenue body collected Rs1.38 trillion during the first five months of the current fiscal year as against the target of Rs1.5 trillion set for the period.

The revenue collection growth for the period was around 5.8 percent, much lower than the desired growth.

Tax experts said the present government has to take bold measures to broaden the tax base with protection to the rights of existing taxpayers. The government has separated tax policy from revenue collection.

The FBR admitted the slowdown in tax collection. It attributed the slowdown to decline of sales tax collection from main sectors like electrical energy, cement, sugar, aerated water/beverage and food products. Withholding taxes collection, however, considerably increased during the last fiscal year.

Last year, the FBR has seen three chairmen. Tariq Mehmood Pasha was removed as chairman FBR in July and Rukhsana Yasmin was posted as the first chairperson.

However, the first lady chief of the FBR had a brief period and was removed on in August. Mohammad Jehanzeb Khan is the present chairman.

Last government several tax incentives in the budget for FY2019, owing to elections year. It, however, took very strict measure against non-filers by imposing restriction on purchasing immovable properties above five million rupees and registering new locally-manufactured vehicle or imported vehicle. The present government proposed to withdraw the restriction through finance supplementary budget, but it was not done due to widespread protests from the stakeholders.

The present government, through the supplementary budget, initiated audit against or imposed recovery fine on people who were automatically selected for late filing of income tax returns. But, the government had to exempt salaried class from the audit.